Even the features of the annual cycle of the Asian-Australian monsoon cannot be understood unless the full dynamics of the ocean and the atmosphere are taken into account in addition to moist surface processes and elevated heat sources over the land surface. Specifically, the ocean and the transport heat in an opposite sense at all times of the year. During the summer, when the cross-equatorial flow is transporting latent heat northwards, the oceans are transporting approximately the same amount of heat southwards principally by Ekman processes. The reverse occurs in winter. In total, the ocean tends to cool the North Indian Ocean during the summer and warm it during the winter thus modulating the cross-equatorial winds and the seasonal amplitude of the monsoon. The coupled nature of the annual cycle of the monsoon suggests a regulation process of the interannual variability of the monsoon. Simply, strong or weak atmospheric monsoonal winds (forced perhaps by ENSO variability or stochastic processes) drive anomalous counter fluxes of heat which modulate the amplitude of the monsoon in the following year. Within this regulation, it is shown that the ocean-atmosphere coupling leads naturally to a strong biennial aspect and also to the development of the Indian Ocean Zonal Mode (IOZM or Indian Ocean dipole). In this context, bienniality and the IOZM are part of the regulatory process that keeps the amplitude of monsoon interannual variability within strict bounds and ensures that series of multiple excessive or deficient monsoons rarely occur. The regulation theory of the monsoon results from the analysis of data sets and from the examination of the response of stand-alone ocean models. The concept is tested in the context of a complex intermediate mutli-layer ocean model coupled to a nonlinear atmosphere and an Asian land mass. The seasonal cycle is replicated together with interannual variability with alternating anomalous oceanic heat fluxes and an IOZM.